3rdPartyFeeds News

Bond Report: 10-year Treasury yield books biggest daily drop in a month as stocks give up gains

U.S. Treasury yields slide again Tuesday, erasing another chunk of last week’s climb, as retreating global equity markets spurred inflows into haven assets like government bonds. Read More...

U.S. Treasury yields slid again Tuesday, erasing another chunk of last week’s climb, as retreating global equity markets spurred inflows into haven assets like government bonds.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.825% fell 5.4 basis points to 0.829%, while the 2-year note rate TMUBMUSD02Y, 0.200% edged 2.2 basis points lower to 0.206%. The 30-year bond yield TMUBMUSD30Y, 1.584% slipped 7.3 basis points to 1.585%. All three maturities saw their biggest daily drop in a month.

What’s driving Treasurys?

Investors said it wasn’t clear what were the catalysts for the global stock-market selloff but suggested U.S. equities were due for some consolidation after seeing a breathless run-up since March. On Monday, the S&P 500 SPX, -0.79% recovered all of its year-to-date losses, but traded lower the following day, bolstering prices for Treasurys.

Lower yields weighed on demand for a $29 billion auction of 10-year notes in the afternoon, but the strength of today’s rally overshadowed the poor results. Sales of government paper can sometimes influence trading in the broader market.

The U.S. central bank’s rate-setting body, the Federal Open Market Committee, is expected to underline its willingness to support the recovery at the conclusion of its policy meeting on Wednesday.

Investors are looking to see if the Fed will announce any new policy measures such as the use of forward guidance, that is, outlining the path for interest rates over an extended period.

Read: Fed will be encouraged by the May job-market surprise but unlikely to rip up its low-rates-for-longer script

What are Treasurys doing?

“I think the reason [stocks] are taking a breather today is largely due to profit-taking,” said Kevin Nicholson, global fixed income co-CIO at the RiverFront Investment Group, in an interview.

“I don’t put much credence in the back-up in rates partly because the front-end is going to be pegged at the foreseeable future and the bar for the Fed to hike rates is out of reach,” Nick Maroutsos, co-head of global bonds at Janus Henderson Investors, told MarketWatch.

Read More

Add Comment

Click here to post a comment